FT Buyer V Remortgaging Property

leocan

Hi,

Recently had offer accepted on property. I am in the fortunate position my Father offered to provide the money up-front on the condition I pay back 75% of the property price.
For example the purchase price is £80,000
My father requires £60,000 back.

Exchange of contracts are soon to take place and I've been examining options on how to raise the £60,000. Two lenders have offered me £60,000 in principle. HSBC and Nationwide have offered me the £60,000 based on a re-mortgaging after purchasing the property.

Would you recommend this approach or pursue another option of applying for as a First-time Buyer which I am currently but presumably this status would change if the property is purchased then would it be considered a re-mortgage?

Is there advantage to approaching a lender as a First-time Buyer Versus Re-remortgage scenario, for example with less minimal fees, better interest rates and/or preferential services?

Hope this makes sense and any advice would be welcome:)

kingstreet

First, many lenders won't lend to you until you've owned the property for six months.

Yes, it's a remortgage of an unencumbered property.

Once you own a property, you are no longer a FTB, so you need to look at remortgage products, which preclude FTBs as you would expect.

If you do raise a mortgage to purchase the property, where's the deposit coming from and how much is it as you won't be able to remortgage to pay it back if it's another parental loan?

leocan

kingstreet wrote: »

First, many lenders won't lend to you until you've owned the property for six months.

Thanks for this information. I understand this is the case but fortunately one of lenders has offered the 75% LTV immediately after purchase of the property

Yes, it's a remortgage of an unencumbered property.

Thanks, learn something new...

Once you own a property, you are no longer a FTB, so you need to look at remortgage products, which preclude FTBs as you would expect.

I expected as much but thanks for clarification

If you do raise a mortgage to purchase the property, where's the deposit coming from and how much is it as you won't be able to remortgage to pay it back if it's another parental loan?

Good point. I could have obtained a mortgage with a strong deposit but my parents kindly offered me the full amount for the property which afforded me a stronger negotiation position when purchasing from the vendor.

Thanks for your response

Thrugelmir

leocan wrote: »

Good point. I could have obtained a mortgage with a strong deposit but my parents kindly offered me the full amount for the property which afforded me a stronger negotiation position when purchasing from the vendor.

The vendor wouldn't have cared where the money was coming from. A sale is a sale. Being a cash buyer would have been more attractive though if they had 2 offers on the table.

getmore4less

So you have a 25% gifted deposit + anything you can raise yourself that should get a decent deal.

You then have the fall back of cash purchase if you can't find a deal quickly enough.

leocan

Thrugelmir wrote: »

The vendor wouldn't have cared where the money was coming from. A sale is a sale. Being a cash buyer would have been more attractive though if they had 2 offers on the table.

I agree but as I was dealing with a Property developer who had a number of business concerns I felt that being a first time buyer and making a cash offer would go someway towards helping him accept my offer which was £10,000 below the asking price. I don't know if it worked but they accepted. In my ignorance I thought I could obtain a better interest rate with lender on basis of re-mortgage versus first-time rate but have discovered this is not the case.
Thanks for your comparison

leocan

getmore4less wrote: »

So you have a 25% gifted deposit + anything you can raise yourself that should get a decent deal.

You then have the fall back of cash purchase if you can't find a deal quickly enough.

Thanks for reinforcing my position and appreciate I am more fortunate than many others.

Thrugelmir

leocan wrote: »

I agree but as I was dealing with a Property developer who had a number of business concerns I felt that being a first time buyer and making a cash offer would go someway towards helping him accept my offer which was £10,000 below the asking price.

Judgement call for the developer. Did you obtain a third party valuation for the property prior to making an offer? If the asking price was inflated then you may have merely paid what they were hoping to realise for the property.

leocan

Thrugelmir wrote: »

Judgement call for the developer. Did you obtain a third party valuation for the property prior to making an offer? If the asking price was inflated then you may have merely paid what they were hoping to realise for the property.

I obtained a full structural survey without actual valuation which supported the decision to offer below asking price plus in my opinion a home is worth as much as your prepared to pay for it and owner prepared to sell it. He purchased in 2009 and same house four years ago when it was introduced to the market was inflated asking price of £160,000. Its always going to be a risk purchasing any house but I believe I am making a calculated one. Its a 5 Bedroom town-house in an sought after, mature area, close to the CBD.